Leaseholders to get clearer information about service charges

Leaseholders in England are set to be given clearer information about the service charges they pay and stronger protections over costs.

Following consultation with leaseholders, landlords and industry groups, the Government has said it will proceed with measures to increase transparency around service charge costs.

It said that coming into force as soon as possible from 2027, changes include an annual report which landlords will need to provide to leaseholders, giving a clear insight into the health and condition of their building and plans for major works.

A new service charge demand form will also set out detailed information about service charge payments and what they will cover.

Landlords will need to provide certain building information on request, such as fire safety information and invoices for maintenance works, going back up to six years and with clear timeframes for responses, the Government said.

It added that where disputes arise, such as over service charges, new rules will protect leaseholders from footing their landlord’s legal bills without challenge, and enable them to apply to recover their own costs.

The Government has also launched two consultations, one covering England and Wales into valuation rates used in leasehold enfranchisement claims, and another into levels of process costs that are paid in enfranchisement transactions.

The process costs proposals are for England only but the Government said it also welcomes responses from Wales.

Housing minister Matthew Pennycook said: “As we bring the feudal leasehold system to an end and move towards a commonhold future, existing leaseholders will not be left behind.

“We are acting to enable more existing leaseholders to take control of their buildings and more easily convert to commonhold as and when they judge the time is right for them, and we are strengthening protections for existing leaseholders in the here and now by driving up service charge transparency and rebalancing legal costs so that leaseholders are empowered to challenge unreasonable charges.”

Kion Ahadi, chief executive of the Leasehold Advisory Service said: “These reforms represent an important step towards a fairer and more transparent system for leaseholders.”